China's vast market key to AI-driven economic transformation: IMF official

China's vast domestic market provides a unique advantage for its AI-driven economic transformation and will unlock substantial productivity gains, said Maria Gonzalez, China Mission Chief of the International Monetary Fund (IMF).

China's vast domestic market provides a unique advantage for its AI-driven economic transformation and will help unlock substantial productivity gains, said Maria Gonzalez, China Mission Chief of the International Monetary Fund (IMF).

In an interview with the China Global Television Network (CGTN), Gonzalez discussed the IMF's upgraded growth forecast for China and the unique advantages of its vast market in driving AI adoption.

While the IMF Fund's latest World Economic Outlook update earlier this month projected a drop in overall global growth, it did revise its forecast more favorably on China.

Gonzalez explained the various factors behind this adjustment, from the evolving geopolitical situation to China's own drive to boost domestic consumption under its latest 15th Five-Year Plan period (2026-2030), a key blueprint mapping out the country's development priorities for the years ahead.

"We increased [China's] annual growth forecast to 4.6 percent from a previous 4.4 percent that we had published in April. There were a few factors that came up when we were thinking about how to do this projection. First, on the one hand, we had the Middle East conflict that of course is playing out on global oil prices and bringing a direct impact on prices for oil and gas in China, as well as affecting potential domestic demand in trading partners to [who] China sells its goods," she said.

"[Other factors] being the potential resolution that could be faster than expected of the conflict in the Middle East, stronger than expected fiscal support from the government, given that this is very much in conjunction with the stated objective of supporting consumption in the 15th Five-Year Plan. And of course, the fact that these elevated oil prices are also boosting demand for some of China's exports," she continued.

Gonzalez also gave her assessment of the significance of China's AI-powered digital transformation, a shift that she acknowledged comes with some risks amid concerns over job security but also provides a unique domestic productivity upside.

"I would like to just give you a little bit of context of what we think of AI globally. Because we do see that it has incredible promise, but also important risks. Globally, the IMF is expecting that the deployment of AI is going to bring productivity growth increases of up to 0.8 percentage points annually for the world as a whole. But of course it comes with risks, of even gains through the world and inside countries, including with greater gains in more advanced economies and lesser gains in low income countries. And of course, there is always a risk of job displacement. We see about 40 percent of jobs potentially exposed to AI. There are some that are complementary," she noted.

Amid these shared global opportunities and structural risks, Gonzalez pointed out that China's unparalleled market scale positions it uniquely to unlock AI's full productivity potential.

"In terms of how we see China in this context, so first of all, [if] you ask about the advantages that are provided by the large market it has, and indeed the vast number of users and firms that China has provides a very unique opportunity to develop, to test, to improve and to eventually quickly adopt AI, which can bring substantial gains to productivity in the country. So this is a really important factor," she said.

China will play host to the 2026 World Artificial Intelligence Conference and High-Level Meeting on Global AI Governance, which will be held in Shanghai from Friday to Monday, bringing together 1,400 guests and over 1,000 participating enterprises and exhibitors from around the world.

China's vast market key to AI-driven economic transformation: IMF official

Yemen is once again teetering on the brink of a wider conflict, as military escalation between Yemen's Houthi group and Saudi Arabia threatens to unravel years of relative calm and complicate ongoing efforts led by the United Nations to revive the political process.

The Houthis, officially known as Ansar Allah, claimed to have shot down a Saudi surveillance drone early Tuesday in central Yemen's Bayda Province, following exchanges of cross-border strikes that ended a period of relative calm. Although the attacks have stopped for now, tensions remain high. The Houthis say they will continue efforts to end what it describes as the blockade on the Sanaa International Airport and at Yemen's ports, raising concerns that the conflict could escalate again.

"Our military operations against Saudi airports will continue, escalate, and expand until Saudi Arabia is forced to announce an end to the aggression and the blockade. Our demands are legitimate. They include ending the aggression, lifting the blockade, and withdrawing all foreign forces from Yemen. Keeping the current situation unchanged means the suffering of the Yemeni people will continue," said Mohammed Al-bukhaiti, a member of the Political Bureau of Ansar Allah (Houthis).

Concerns are not limited to continued cross-border strikes, with increasing fears that fighting on the ground could return after reports of military buildups near the Yemen-Saudi border.

Analysts say that a wider conflict could push Yemen back into a more complex phase of the war and undermine the de-escalation that has largely held since the UN-brokered truce in 2022.

"I believe what is happening now is the calm before the storm. Sanaa is continuing its escalation, and all indications point to that, including the ongoing tribal mobilization, military buildups, and Sanaa's repeated statements that it will continue escalating until all forms of the blockade on the Republic of Yemen are lifted. All these factors indicate that a major escalation could take place in the next phase. The situation is dangerous and could turn into serious problems if it is not addressed and political understandings are not reached to end this situation," said Ahmed Al-Mukhtafi, a political analyst. At the same time, the UN is trying to prevent the crisis from worsening, with UN Special Envoy for Yemen Hans Grundberg on Tuesday holding talks in the Omani capital Muscat with Omani officials and the chief Houthi negotiator Mohammed Abdulsalam.

The representatives reportedly discussed ways to reduce tensions and restart the political process, including covering military, security, and economic issues, in an effort to keep the chances of a comprehensive peace agreement alive.

Yemen edging closer to wider conflict as Houthis, Saudi Arabia trade strikes